Keller Williams Commission Split | What’s A Cap?

Keller Williams Commission Split | What’s A Cap?

One of the most common questions people interested in a real estate career with our company ask is, “What is the Keller Williams commission split?” It’s funny to say, but it doesn’t really matter! When it comes down to it, the most important thing a broker can provide you is the best real estate training, not a generous split. 100% of zero is still zero. If you don’t know what you’re doing or how to run a business the right way, people are going to choose not to work with you.

The Best Real Estate Commission Split

With that said, the Keller Williams commission split is very competitive compared to other real estate firms. Every agent at Keller Williams is treated exactly the same. There are no prima donna’s running around yelling at new agents for doing something wrong or parking in their coveted reserved parking space. Every agent is on a 70/30 split. That’s 70% to the agent and 30% to the broker. Since KW is a franchise, there is a franchise fee (6% on each transaction up to $3,000) which is included in this calculation.

Another way you may see this calculated is with an agent on a 64/30/6% split. 64% to the agent, 30% to the market center and 6% to KWRI (capped at $3000). Both formulas get you the same result because the Keller Williams commission split is capped.

The best part about the Keller Williams commission structure is the ‘cap’. Each office has a cap on commissions based on economic conditions and operating expenses for that specific market center. Also contributing to the cap amount is the average median home price in your area. It usually amounts to selling 8-10 houses per year. Once an agent reaches the set amount of production (cap), they are no longer required to pay the office a split, meaning the agent is at a 100% commission until their anniversary year starts again. How amazing is that?

Example

Sally is a new agent with Keller Williams and is ready to start building her real estate career. The cap in her office is $18,000/yr. This breaks down to $15,000 to the market center and $3,000 to KW International for the franchise fee. Sally knocks it out of the park in her first 12 months and closes a total of $4M in sales. She has a Gross Commission Income (GCI) of $120,000. From this amount, $18K is paid as her commission split. The remainder, $102,000, goes to Sally.

Let’s raise her CGI to $200,000. She still only pays $18K/year to KW and takes home $182,000. She knows exactly how much she will pay her broker in a given anniversary year. If she didn’t reach her cap, she’s not required to pay the difference. KW doesn’t get paid unless Sally gets paid. She doesn’t work for Keller Williams. Keller Williams works for her.

Other Real Estate Companies Commission Structure

When comparing real estate companies and how they stack up to the Keller Williams commission split, there are only two other real estate business models. Independent and dependent companies.

Independent Real Estate Business Models

“Good luck, I hope you make it” is a good way to sum up this model. You’ll see the independent type of commission structure with discount brokerages or 100% commission companies. The main focus is the success of the broker, not the agent. This type of broker-centric model is one-sided and is not designed for agents that need training, technology or support.

Example

This is pretty simple example. Gross commission is $10,000. Sally keeps all $10K. She will have to pay her broker either a monthly desk fee or a transaction fee. These fees vary, but can range from a couple hundred dollars per deal or up to a couple thousand per month.

Dependent Real Estate Business Models

Dependent real estate companies are the most common type of brokerage in the industry. Their commission split usually starts at the traditional 50-50 split. This split can continue for as long as you are selling or it can operate with a sliding scale. Based on your production, it can move to 60-40, 70-30, 80-20 and so on. The most important thing to notice here is you will always be paying your broker a fee. There is no cap or end in sight. Most franchises do not cap their franchise fee, so even if you work your way up to a 100% commission split, the broker is still getting paid. Dependent brokers also generate leads for their agents. Sounds good, right? Think again.

Example

A common referral fee for referring business to an agent is 25% of the gross commission. Let’s say the dependent broker generates a buyer lead and refers it to Sally. The gross commission ends up being $10,000. Sally is on a 50-50 split and owes the broker a 25% referral fee. The broker nets $7,500 and Sally gets $2,500.

Doesn’t sound too fair since Sally did all the work, spent hundreds of dollars in gas, numerous hours showing property and still has to pay taxes on this commission. This model is designed for agents that want a job, not a career. You will learn how to sell real estate, but will not learn how to run a real estate business. You are basically an employee for the dependent real estate broker.

Interdependent Real Estate Business Model

At Keller Williams Realty, we teach you how to generate your own leads and take ownership in your real estate business. It’s like the old saying, “Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime.” The KW business model is interdependent, meaning you are independent in running it, but are not just thrown out there to fend for yourself. We provide the tools, resources, strategies and empowerment for you to run and manage your own real estate business.

That’s probably one of the reasons you are getting into this business, right? To take control of your life, your schedule and build a legacy for your family. KW promises to teach you to be independent in your business and also give you the leverage to balance your business and personal life. It’s not just about business at Keller Williams. It’s about the quality of life of our agents. Bottom line, if you don’t succeed, Keller Williams doesn’t succeed. By offering a cap on commissions, KW gives agents the best opportunity to take home more money than any other real estate business model.

Is The Keller Williams Commission Split Right For You?

In the end, you need to find the best fit for you. If you can handle an ever-changing market without any support or guidance, go with the independent company. Just looking for a job, a dependent broker will be the best fit. If you’re looking to run your own real estate business and learn how to balance your business/life, there’s no better place than Keller Williams. At KW you will receive the best platform to run your real estate business and with the benefits of the Keller Williams commission split, take home more money in the long run.